Here you can find a nice, short article "why the fed has moved away from targeting monetary aggregates in conducting monetary policy" written by John Williams of the FRBSF. The answer: essentially, due to the change in the payment behaviour of Americans away from cash on to credit cards and such developments as paypal etc. So why don't target a different, broader monetary aggregate such as M2 for example? Well (and I like the american, pictorial way): "despite repeated efforts, like the mythical city of El Dorado, this ideal measure of money has proven elusive".
(This short article is part of a speech covering various other issues such as reserve policy or the asset purchasing program of the Fed.)
